Do the terms financial education, financial literacy, and business education all mean the same thing?
A lot of people think so, but that assumption couldn’t be more wrong. These three terms get tossed around like they’re interchangeable, yet each one plays a very different role when it comes to money.
For example, financial literacy is only acquired after someone has received appropriate financial education, since you can’t apply what you haven’t learned. Business education, on the other hand, is more technical. It focuses on how companies manage money and not necessarily how individuals should manage theirs.
Funny enough, I’ve seen plenty of business graduates struggle with personal finance. Why? Because learning how to write a business plan doesn’t teach you how to budget your own salary. That’s the problem. Business education doesn’t automatically make you financially literate.
Let's differentiate them in simple language:
According to a report provided by the Financial Sector Deepening (FSD), “a financial education program is an initiative that teaches the knowledge, skills and attitudes that people can employ to adopt good money management practices for earning, spending, saving, borrowing and investing”. The people who are able to apply what they learnt in financial education are the ones who are categorized as financially literate individuals.
Many people often mistake or rather misunderstand, financial education for business education. The two terms are utterly different. Due to this misunderstanding, it is important to understand that financial education has nothing to do with business development service, a concept of business education.
Additionally, financial education is not a program that teaches people on how to craft a business plan or how to run a business. It also does not delve in other business education concepts such as pricing, costing or even record keeping, thats acquired in business education. Financial education can also be acquired on many sites, such as Forbes, Investopedia, and many other sites. On YouTube, there are many vlogs and podcasts that teach a lot when it comes to financial education, one of my favorites is The Diary of a CEO by Steven Bartlett.
Moreover, the term financial education should not be mistaken for financial literacy. It is through financial education that financial literacy is developed. It majorly focuses on a wide range of basic financial skills that aids a person in making decisions regarding money. Therefore, if you are a graduate of business education, you still need to acquire financial education and apply the acquired knowledge in your daily life to become financially literate.
On a personal level, financial education develops the necessary literacy required for households to use scarce resources more effectively or rather economically. Additionally, it helps individuals to pick the best financial products and services that meet their needs.
On the individual level, you dont need a business degree to acquire financial education. It can easily be acquired through many sources, one of them being fineducke, a free platform for the youth to learn matters money and finance.
N/B: One of the Netflix films that can teach you about how to spend less and save more is none other than Get Smart with Money.
It can thus be asserted that the financial literacy acquired from financial education makes people change from being reactive decision makers to being proactive decision makers.
For financial institutions, the acquisition of financial education helps them to have an edge in meeting the demands of their clients, gain a competitive advantage over their rivals.
It also supports informed consumers and improves their standing as good corporate citizens. Therefore, it can be asserted that having financial education is a good thing for both the consumers/clients and the financial institutions.
On a market level, informed consumers play a monitoring role in the market, weeding out bad practices and providers. Informed clients are better able to put pressure on financial institutions for appropriately priced and transparent services.
The reason as to why I say financial education and literacy is a good thing for both the customers and financial institutions is based on the fact that financially literate consumers always make better customers, and in turn, they represent reduced risk for financial institutions, thus a win-win for both.
I’m Clinton Wamalwa Wanjala, a financial writer and certified financial consultant passionate about empowering the youth with practical financial knowledge. As the founder of Fineducke.com, I provide accessible guidance on personal finance, entrepreneurship, and investment opportunities.
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